Debt crisis: nervous world awaits Greek polling day

The New Democracy party, narrowly favoured to win Sunday's Greek election,
knows that the fate of the 17-member eurozone could lie in its hands.

Although the promise offers some succour to the international community, there is widespread concern that if the radical Leftist coalition Syriza triumphs it will precipitate Greece's exit from the single currency. That could endanger Spain, Italy and others, further weaken the region's hobbled banks and lead to a worldwide credit crunch, reminiscent of the 2008 crisis

With the world watching nervously, the party has vowed to pursue the major reform required by the country's colossal bailout agreements, while also pledging to ease deeply unpopular austerity measures.

Although the promise offers some succour to the international community, there is widespread concern that if the radical Leftist coalition Syriza triumphs it will precipitate Greece's exit from the single currency. That could endanger Spain, Italy and others, further weaken the region's hobbled banks and lead to a worldwide credit crunch, reminiscent of the 2008 crisis.

Antonis Samaras, leader of the conservative New Democracy Party, underlined this message on Friday, and told Greeks that they faced a stark choice between staying in the euro or a "nightmare" return to the drachma.

"We are going into an election to decide the future of Greece and of our children," he said at a rally in the capital's central Syntagma square.

"The first choice the Greek people must make is: euro versus drachma."

Investors in the US welcomed reports that central banks were acting to head off a deeper European debt crisis, but there was more bad news for the Greeks as Carrefour, Europe's biggest retailer, said it was pulling out of the country after making estimated losses of €40m (£32.3m) last year.

French bank Crédit Agriocole has meanwhile moved to take direct control of its Albanian, Bulgarian and Romanian units from its Greek bank Emporiki in order to minimise the impact from any Greek exit from the euro.

The finance ministry has reportedly admitted that Greece only has money left to pay salaries and pensions until late July, and state revenue is officially €666m short of a target €18.8bn for the first five months of the year.

Without the next tranche of its €130bn bailout Greece could soon default – whoever wins that remains a possibility.

No party is likely to win outright. The final public polls, published on June 4, showed that New Democracy was leading Syriza by two percentage points.

Private polling conducted since suggests that gap has widened a touch.

That would leave New Democracy leader Antonis Samaras able to form a coalition with the fast-diminishing socialist party Pasok and a smaller grouping, the Democratic Left.

None of the parties was able to lead a government after the May 6 election.

Dimitrios Tsomocos, a senior economic aide to Mr Samaras, said a victory for Syriza and its young leader Alexis Tsipras would "transform the Greek economy into a lunar landscape".

Yet New Democracy is also seeking to end many of the harsh cuts contained in the memorandums of understanding between Greece and the European Commission, International Monetary Fund and European Central Bank, which have propelled Syriza's astonishing rise into second place from a party that polled 4pc in 2009.

"The difference is we are seeking a mutually-agreed time extension of the memorandum, not a unilateral abrogation of signed obligations," Mr Tsomocos told The Daily Telegraph.

Greece has so far performed woefully in meeting the memorandum's requirements for economic liberalisation that might have provided encouragement of a recovery.

But troika officials concentrated more on the imposition of large horizontal cuts to pensions and public sector wages, as well as tax hikes, which have helped impoverish millions.

Deepening misery and a sense of a society coming apart are palpable. The riots that scarred the capital's centre for 18 months may have abated, but soup kitchens are overrun, businesses are closing and even the once infamous traffic jams have receded.

Voluntary medical clinics are providing free life-saving drugs every day to hundreds of patients who have lost their health insurance, usually because they have exceeded a year of unemployment.

"This is a state of war, people can't get their basic needs," said Athanassios Kapralos, an industrial designer who volunteers at the MKIE clinic in southern Athens.

"We have pensioners coming here who have 500 euros to live on and their medication is 300 a month. It is just incredible this is happening in Greece, a modern country in Europe."

Despite Germany's public unwillingness to cut the Greeks any slack, Mr Tsomocos and his party are convinced that "Europe's ears are open" to a more "pro-growth" approach.

"I think the Germans have realized that the fiscal medicine was too strong for the patient and are now reconsidering.

"The question is, is there enough time for Greece and the rest of southern Europe?" he asked.